09 April 2007

“Knowledge management strategies that create value”

I found a very good article with the same name as this post on the Accenture site. It was written in 1999 by Leigh P. Donoghue, Jeanne G. Harris and Bruce E. Weitzman.(Accenture.com article) It presents a rather visionary KM approach considering it is now about 8 years old.

The article starts with this statement I totally agree with: “There is no one-size-fits-all way to effectively tap a firm's intellectual capital. To create value, companies must focus on how knowledge is used to build critical capabilities”. I would add that the more pervasive a Company’s organizational culture is, the more this is true. So many technological solutions have been presented as THE knowledge-sharing solution, and nearly as many have failed.

“[…] Knowledge management is complex and multifaceted; it encompasses everything the organization does to make knowledge available to the business, such as embedding key information in systems and processes, applying incentives to motivate employees and forging alliances to infuse the business with new knowledge. Effective knowledge management requires a combination of many organizational elements—technology, human resource practices, organizational structure and culture—in order to ensure that the right knowledge is brought to bear at the right time”. Well, this is what I (and many other KMers) have been writing for some time now. You cannot count on technology alone, or on a structural change alone, or on a new reward and recognition mechanism alone, to instigate a deep, long-lasting and effective leveraging of an Organization’s Knowledge. You need a holistic approach with both top-down leadership and bottom-up initiatives, being aware along the way that different core processes will require different KM solutions. The authors then present a framework created and used by the Accenture Institute for Strategic Change. Its aim is to associate “specific knowledge-management strategies with specific challenges that companies face”.

Well, my first impression of this framework presented this way was: whow! That looks simple (if not simplistic). I was reassured a bit when reading two paragraphs down that “[..]It is important to note that there are no hard-and-fast connections between a certain core process and a work model, because the same process can be performed in different ways”. In other words, you cannot actually plot core processes on the table above to build a model to fit all companies. This would also contradict the initial statement that there is no one-size-fit-all solution. So this is where the Accenture consultant comes in. The way the work is performed in the organization must be defined in order to select the right KM approach.

In the above diagram, the authors show how an Organization’s work processes can be aligned with a specific KM model.

I think this framework is approaching the issue in the correct manner, i.e. holistically and with a good deal of flexibility in order to adapt to any organizational context. However, there is a level of flexibility that I believe is missing. It could be that it was omitted by the authors in this rather short presentation. Nevertheless, I can only judge on what is given here. The flexibility that seems to be lacking is the consideration that within a specific work process, say Retail operations, you can be faced with a rather more complex context than what is assumed with the different diagrams given in this article. In the example above, the authors have assumed that Retail operations would be aligned to the Transactional Model. The authors define this model as the one “in which there is a low degree of both interdependence and complexity. Work is typically routine, highly reliant on formal rules, procedures and training, and depends on a workforce that exercises little discretion”.

Indeed, Retail relies on direct transactions with the end-customer. However, the definition above is valid in a mass-market context with low value, low margin, high quantity and relatively low product differentiation. Take instead the luxury market context (and I choose this example because I have 14 years of experience in it) with high value, high margin, low quantity and very high product differentiation. Within the Retail operations of a luxury products (and/or services) organization, you will find:

* A rather low degree of interdependence, so the Transaction model still fits for this dimension.

* There is relatively high degree of complexity. In the jewellery business for example, the expertise in gemmology of the sales-associate can represent the key added-value for the customer in search of a diamond necklace. Experience in how to satisfy very demanding and difficult customers is typically what can make a good sales-associate very good.

* Work is not “routine” to the same degree as in a mass market since each transactions can differ greatly due to the uniqueness of the product sold, the customer’s varying requirements and behaviours and the sales-associate varying level of expertise and experience.

* Work relies on formal rules and procedures but not exclusively. There is also a significant degree of informal relationships between sales-associates or between them and their customers, with whom they build strong relationships over time. Often, a sale is made as a result of this informality.

* Work does initially rely on training - especially for Brand and product knowledge as well as sale-techniques – but the best performers among sales-associates rely even more on their intuitions and experience.

* Work does depend on a workforce capable of making decision on their own, such as proactively contacting customers, deciding on which products to suggest to a customer, or offering/accepting a discount in a responsible manner.

The Expert model would therefore come to the rescue in this context but not as a replacement of the Transaction model. I am suggesting here that a combination of both models is needed to map a luxury business’ Retail operations. In this Retail context, there is still a degree of “routinization” and automation, and there is a definite “productization”. However, there is also a significant need for experienced hiring and capability protection. Capability/skill development is also a concern. (Apprenticeships used to be commonplace in luxury retail businesses some 20/30 years ago, but was replaced by a more individualistic and internal competition-oriented approach. I foresee that it will come back as a result of more knowledge-conscious management – read my earlier post on the subject: http://leveragingknowledge.blogspot.com/2007/03/knowledge-sharing-for-retail-manager.html).

Now what would such a mix of these two models mean in terms of practical solutions? The authors do not provide (for obvious reasons) the list of KM solutions they would implement for each model. However, I can guess one here.

The degree of “routinization” involved in luxury retail operations would demand solutions delivering just-in-time information (as opposed to just-in-case) to the sales staff. This could be in the form of a CRM tool providing a sales-associate specific information about an unfamiliar but regular customer sitting in front of him/her. It could provide the list of all the products the customer purchased so as to enable the sales-associate to suggest matching products among new or older collections. It could also have the anniversary dates such as the customer’s or his/her partner’s birthday, or their wedding date; for the sales-associate to wish him/her and suggest suitable gift ideas. All this customer-specific information is valuable but it can really create significant value when it is associated with context-sensitive information – in effect, offering expert knowledge. This is where our authors’ Expert model comes in: In the situation above, our sales-associate would benefit from the relevant knowledge of a more experienced colleague. More experienced here does not necessarily mean more seniority; it can mean better specific knowledge about the customer being served, or even about the customer’s cultural background. What is needed is therefore an apprenticeship-like solution associated (or better integrated) with the CRM tool. For example, the sales-associate could be informed that the customer is of Indian origin and Hindu, with the “warning” that between August and October, all Hindus purchase gifts (and in particular luxury products) to offer on Diwali (their annual “festival of lights”). The sales-associate could happily then suggest: “Oh Diwali is coming soon isn’t it? Please let me show you this brand new collection of jewellery that should look stunning when worn with a sari” (typical Indian dress).

I have here mixed the Expert and Transaction models but I am sure similar combinations will be needed in other contexts, sometimes involving 3 or even all 4 models. Graphically, this means to allow a work process to be plotted in the middle so as to overlap 2 or more models. The Process mapping diagram shown above seems to allow this (“customer service” work process overlaps the Integration and Transaction models) but it is not clear if it was really intentional (probably they worked it out themselves since then). In any case, it was a promising framework and I would love to learn of its implementation successes.

3 Comments:

I wonder whether you have considered knowledge management strategies that can create value for individuals, extended families and others, for example through collaboratively sharing and working together with others around the world on genealogical research? Whats more collaborating using FREE tools like Google's Documents and Spreadhseets, on line forums, SKYPE or similar VOIP technologies.

I would be interested to read the views of you and your readers. You may wish to consider commenting for example to the article posted at: http://garpet.blogspot.com/2007/04/collaborative-genealogy.html

My site is more focused on knowledge-sharing/collaboration within Organizations and between Organizations and their customers.The Google and Yahoo model is extremely effective in the public domain and frankly, they don't need my help. It is within still most Organizations that there is a lot to do to foster innovation through knowledge-sharing.Peter

About Me

I have extensive experience in Information Technology and Systems Management in the Retail sector, and particularly proficient at aligning technology with the business strategy and objectives.
I joined BP in 2011.